Election Stock Market
Election stock markets (also referred to as election prediction markets) are financial markets in which the ultimate values of the contracts being traded are based on the outcome of elections. Participants invest their own funds, buy and sell listed contracts, earn profits and bear the risk of losing money. Election stock markets function like other futures exchanges, such as commodity exchanges for the future delivery of grain, livestock, or precious metals.
The main purpose of an election stock market is to predict the election outcome, such as the share of the popular vote or share of seats each political party receives in a legislature or parliament. Efficient markets are very good at reflecting all available information, often reflecting information faster than opinion polls, which take several days to complete and process. Traders also have a strong financial incentive to reflect their true opinion about the election outcome regardless of their political preferences.
Election stock markets are also used for research and teaching purposes. Researchers can study trader behavior and market operations. Election stock markets also teach participants the fundamentals of trading, such as how to take a long or a short position. A list of related academic research papers appears below.
Read more about Election Stock Market: Examples of Election Stock Markets, Reliability of Election Stock Markets, Academic Papers, Academic Journals, Popular Articles
Famous quotes containing the words election, stock and/or market:
“Do you know I believe that [William Jennings] Bryan will force his nomination on the Democrats again. I believe he will either do this by advocating Prohibition, or else he will run on a Prohibition platform independent of the Democrats. But you will see that the year before the election he will organize a mammoth lecture tour and will make Prohibition the leading note of every address.”
—William Howard Taft (1857–1930)
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—Nelson Goodman (b. 1906)
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—Henry David Thoreau (1817–1862)